deal architect

Stretch Goals

Two of my New Year’s resolutions were to walk 10,000 steps a day, and to post 1,000 entries over 2014 on my innovation blog.

Half way through the year, FitBit tells me I have walked nearly 2 million steps – so slightly above my goal. Typepad tells me I have posted 480 entries on New Florence, so slightly below my goal.

The rest of the year should look achievable on both goals, but is actually pretty daunting.

I am working on two books which will take away from blogging time, even though the innovation fodder I have access to keeps growing. And the heat and humidity and bugs in FL are getting to uncomfortable levels.

So, I am  treating both as stretch goals for now. FitBit’s frequent badges are a nice reward. Continuing comments from blog readers  are an even nicer source of support.

Keep them coming- thanks! 

Photo Credit

Grape Escape–Democratizing Analyst Access

It’s not unusual to go to vendor events which have 50, 75, 100 analysts and bloggers in attendance. Smaller vendors just cannot afford that level of coverage, so I appreciate a “shared service” Judith Rothrock of JRocket Marketing offers her vendor clients. She invites 20 to 30 analysts to an event hosted by a few of these vendors.

I try to go every couple of years – the format is a few hours of slide presentations, a panel with a few of their customers and partners and a fun evening to mingle. She is particularly creative about the evening theme – in 2009 she had a menu which replicated the meal from President Obama’s inaugural dinner.

This year the location was Chicago, around a somewhat predictable Gangster theme. Johnny Rocco, our shuttle driver and “Slippery Sloop”, our guide set the stage with Al Capone and Tommy Gun anecdotes. And uptight analysts gamely got up and danced – if you can believe it to an audience of a fish tank at the Shedd Aquarium!

But there was plenty of serious content. I particularly appreciated Joey Benadretti, President of SYSPRO USA, summarizing results from a MAPI survey on manufacturing trends. In almost a complete reversal of the maquiladora trend where manufacturing moved to the Mexican border, recent US manufacturing has been moving to states closer to the Canadian border. It was eye-opening to listen to Karen Watts, CEO of Apparency talk about the countless forms vets have to navigate and the inefficiencies at the Veterans Administration.

The time with the invited executives was even better.

Kim Pederson, CEO of 1000bulbs, is the epitome of a small entrepreneur who has successfully grown his business through technology. He described his humble start from door to door sales of light bulbs and growth to now a web $100 million business, selling 30,000 SKUs to over a million customers a year.   In a one on one, we discussed his global supply chain,  and how he transitions his business between industrial and consumer lighting markets (as in holiday lights).

Ned Hunter, a former Naval Aviator, spoke with credibility about the challenges at the VA. Apparancy is licensing some of the IP he had developed to offset the inefficiency: “GS level 4-5 workers were reviewing claims and passing stacks of claims to GS level 12 workers to adjudicate who then passed their work back to a GS level 4-5 to manually key the data into the “VetsNet” system to release an monetary award or appeal letter.”

Mike Murray of Rochester Electronics described components few of us think about. These are “end of life” electronics and dies and other parts where the original supplier had long been out of business, patents have expired, often the design has to be reverse engineered. In a one on one, he described the quality issues that counterfeit components can cause with aging platforms in the  aerospace industry.

In reverse,  David Ryan of SaaSOptics described a far more contemporary trend – the growth of SaaS and other subscription revenues and a new set of jargon like “MRR Cohort”.  His company helps with revenue recognition and invoicing and optimized analytics for tracking key subscription metrics. 

Looking back, that was a wide array of topics to have covered in a day. Not your typical analyst briefing but something as an innovation author and blogger just brightened my day.

One version of the truth?

When you get two ex-accountants together, talk invariably turns to numbers.

Dennis Howlett and I spent some time at the Plex conference a week ago and in discussing the book on SAP  I am working on he advised me: “watch your numbers”

It’s good advice and I have reached out to more analysts for data for my model, even though the book is less about numbers and more about how customers are coping with or walking away from SAP and its ecosystem’s economic burden on them.

But I also remarked to him how ironic that comment was. The “book of record” or as its fans have said countless times “the single version of the truth” has chosen to not build its own model of customer costs in implementing or operating its software, so observers like me have to.

Even more ironic is the fact that Dennis has told me countless times, he does not believe SAP customer numbers it posts on its website. Several other analysts agree with him. Ditto with membership counts in its community. No single answer.

Same with number of licensed users. So when SAP says it will have a billion users by 2015, people yawn, when they should call it out.

Or when SAP reaches for the stars and talks about a $ 90 trillion “network economy” (yes trillion), nobody stops to say the Gross World Product (yes the entire planet’s ) was only $ 72 trillion in 2012. Or that it is highly unlikely more than a small fraction of the planet will use Ariba or the new SAP partnership with eBay for that commerce

Ah, yes the single version of the truth.

But Dennis’s advice has led me to more analysts who tell me my original model may actually have been conservative.

By the time my book is out, maybe my model will have even more shocking numbers and I am sure I will have nitpicking sessions with Dennis and others.

Or may be not – the book has to be about the voice of countless customers who are trying to optimize their SAP investments.

(Credit for the GWP number to my friend Anshu Sharma)

Musk, Zuckerberg: “The bastards say welcome”

I was making small talk with Shaun Rheingold at the Plex conference earlier this week. He is a former Tesla designer who has moved east to Michigan to start Canvas Watch. I asked him if Elon Musk is worried about BMW’s $ 2 billion investment in its new I series electric vehicles. Shaun’s view – Musk is so passionate about sustainable transportation that in way he is pleased to see major automakers take electric models seriously.

Indeed today as he announced he is “open sourcing” his Tesla patents, Musk says “Our true competition is not the small trickle of non-Tesla electric cars being produced but rather the enormous flood of gasoline cars pouring out of the world’s factories every day.”

Shades of Mark Zuckerberg. In The New Technology Elite I quoted James Hamilton of Amazon, a data center “jedi master” about Facebook’s hyperefficient Prineville DC and its Open Compute Project.

“In the past, I’ve seen some super interesting but top secret facilities and I’ve seen some public but not particularly advanced data centers. To my knowledge, this is the first time an industry leading design has been documented in detail and released publicly”

Neither Musk nor Zuckerberg are being altruistic. By releasing component details, they hope to attract a wider scale of suppliers for their designs.

Then there is the “Data General” effect. In the Pulitzer prize winning "The Soul Of A New Machine", Tracy Kidder wrote of an ad that Data General produced but never ran. It read "They Say IBM's Entry Into Minicomputers Will Legitimize The Market. The Bastards Say, Welcome" 

At least short term, it bought Data General respect as a pioneer. So much cheaper and better than paying armies of attorneys to defend patents against even bigger armies of attorneys of bigger competitors.  

Vishal Sikka at Infosys

Vishal Sikka has landed as CEO of Infosys, a few weeks after a tumultuous exit at SAP.

My reaction – beyond the short term calming of jittery investors, Vishal will have his plenty of other opportunities. As I wrote last year in How Infosys lost its sheen the problems run deep.

What Infosys needs is to move application management, its bread and butter business, into the newer multi-tenancy world. SaaS vendors support 50 to 100X more end users  per support staff. Upgrades of thousands of customers are done in days not years common in the Infosys world. Given India’s higher wage inflation, the pressure to be more productive is even greater. Amazon is delivering lower data center price points every quarter. Can Vishal push that cloud mindset?

Given his recent HANA focus, I can see Vishal pushing analytics as a focus area for Infosys, He will find a newer set of talent sourcing companies have been exploring. Players like Mu Sigma and BGI have already scaled to thousands of staff in India and China respectively. They are not traditional outsourcers (BGI focuses on genomic analysis) but are showing clients there is a potentially different staffing model – MasterCard is a client of and an investor in Mu Sigma. Even more interesting is Kaggle’s crowdsourced data scientist model. Can Vishal position Infosys as a differentiated analytical player?

Given his software heritage, I can see Vishal take Infosys into more IP enabled revenue or product engineering services. Two Indian companies, HCL and Wipro have traditionally done better in product engineering, and even they have a shrinking market share as companies invest heavily in their own IP enabled products and services (In The New Technology Elite I had profiled such investments in 75 industries) . As an example, most auto companies these days have hundreds if not thousands of software engineers on staff in their product engineering/R&D groups working on infotainment, safety, fuel efficiency and other technology enabled features. Can Vishal reposition Infosys there? 

The opportunities Vishal walks into are many. One thing is for sure – Infosys’s presentations at Oracle Open World should improve dramatically. The last few have been pretty uninspiring

ERP Mayberry

“No stock footage here”

Remarked Plex CEO Jason Blessing about the video about various shop floors at customer sites which kicked off his user conference, PowerPlex yesterday. Actually he need not have used any footage at all. He had 900 attendees in person representing 1,100 sites across 20 countries where the software helps with shop floor, product quality, in-bound logistics and a variety of other operational areas.

It was a show about ERP as it was meant to be when we at Gartner in the 90s had evolved the concept of MRP. Somehow, along the way ERP lost focus on the plant and became much more  a white -collar, back-office phenomenon. In the two decades I have seen consultants hype up the concept as a reengineering platform, a change agent and more. At the other extreme, I have also encountered dreading executives behave as if they were marching to the gallows when they started an ERP project as if it was guaranteed to be doomed.

The mood at PowerPlex was more balanced. A muted (though optimistic with the manufacturing Renaissance I have written about) Midwestern vibe, fitting with the event held in Grand Rapids in W. Michigan. Few slick consultants. Mostly executives to whom the software is functional and affordable. The session tracks screamed operational excellence – Kanban, Finite Scheduling and Cost of Quality (CoQ). The lunches had networking tables around topics like Traceability and Recalls.

Jason and others announced customers who are doing reference calls even before they go live. That shows a refreshing nonchalance that the software and the implementation project should just work. In an one-on-one, an auto industry supplier told me the  parent company that they were spun out from , a SAP customer with multiple outsourcing  providers in the mix, spent 2.5% of revenues on IT. Now, they spend less than 1% and Plex is not even the largest line item. They also described how they worked with another customer to help Plex extend functionality unique to global markets they were expanding into. An aerospace and defense industry customer described how Plex has been easy to work with for customizing to unique industry needs like export compliance. Almost 70% of product enhancements come from direct customer requests.

Of course, that process will become more complicated as Plex continues to grow – something a $ 50 million cash infusion announced at the event is designed to accelerate.  

Last evening, at the Rosa Parks square in downtown Grand Rapids, hundreds of young adults were “swing dancing” in the warm evening. Frank Scavo, who I was walking with, remarked the scene had a Mayberry feel to it.

Mayberry to me summarizes the  event – there was a throwback, pure feel to it. ERP as it was meant to be. Just made contemporary with cloud architecture, web services, mobile UI and global functionality.  

Cringely’s IBM

I just finished reading Robert Cringley’s book on IBM. One word to describe it : “Depressing”.  Not the author or his style, the  subject matter. It has more sections on financial engineering – buybacks and earnings management – than about “wow” you expect from a technology icon, but then that is what has defined the last decade’s IBM.

As an innovation author, I enjoy writing and reading about breakthrough and inspiring stuff. Cringely has little about Watson, Smarter Cities, cloud and other IBM “innovations” because I suspect he believes they are mostly marketing hype. He has little on IBM Software because I suspect he knows it is mostly milking long-in-the-tooth brands like Notes, Tivoli and DB2.

It is more depressing that he has been harping about IBM’s state for years now and few journalists and analysts have joined his cynicism. BusinessWeek recently had a critical article and I have posted an occasional critique, but by and large we have let IBM market away.

Most depressing is that customers keep writing it large checks. Indeed in the latest Fortune 500 issue, an executive talks about how IBM is now well positioned for the “front office”. Not sure what qualifies IBM Global Services (its largest product today) to help customers tech-enable their products (unlike a GE or a Siemens or a UTC, IBM has gutted its own hardware businesses) or with other digital business model and other transformations. In my latest book effort, The Digital Enterprise, none of the 20+ global brands that are case studies highlighted IBM,  but the brand still endures and a new constituency will give IBM more runway.

One thing which would have made the book more interesting - more customer conversations. Cringely tends to rely on his own analysis and a wide chorus of (mostly anonymous  and unhappy) IBM insiders. Again, just a style preference -  my own books tend to be case study and customer cameo heavy.

Read the book after you listen to an IBM pitch and use it to balance out fawning reviews that you will get from so many other quarters.

You may find him too cynical. I find him brave.

Away from Sapphire. Closer to SAP customers

A few months ago I announced I was discontinuing SAP coverage on this blog, What many people missed was this at the end of the post

'As I have done for 25 years, I will continue to advise consulting clients about SAP matters'

The last few months I have intensified my conversations with SAP customers. Instead of blogging about the organizational turmoil at SAP. Those conversations may become the basis of a new book

My only hesitation is it would be a pivot from the innovation focus of my last few books. But 25 years provides plenty of anecdotes to create at least a short book.

Will make a decision very shortly

In the meantime those at Sapphire, have fun. Its always a blast but I am enjoying some spectacular scenery with the family in the Pacific NW.

Satya Nadella: Rewriting the book on “co-opetition”

I asked Satya Nadella at last Fall’s analyst summit why Microsoft had been slow to leverage the multi-billion $ investment in Azure infrastructure (I had first written about the innovative data centers in The New Polymath in 2009).  He seemed a bit taken aback by the question and said Office365 was one of the most successful cloud applications in the market. I  clarified I meant VARs and ISVs and customers were not using it more as an IaaS. So on the announcement with Salesforce last week, I thought he had scored an IaaS coup. The announcement was more modest – about integration of Salesforce with O365, availability of Salesforce1 on Microsoft mobile – but still a coup. 

In a few short months as CEO, Satya has been emphasizing “cloud first, mobile first” philosophy quite a bit and showing a willingness to work with several leading industry players. Behind the scenes, that means he is breaking down silos within Microsoft and he is also redefining “co-opetition”.

Take the Office for iPad announcement. For years, earlier tablets from HP and other Windows partners faltered because of lack of Office availability and the related lack of appeal to corporate users. To do so with Apple shows how far Microsoft has come. And yet its own Surface offering keeps getting better (version 3 has some  really attractive features as a hybrid laptop/tablet). Think of the competition implications for Apple and Win OEMs a couple of years from now.

Or this week at Sapphire, Azure will get play as an IaaS play for SAP. The bigger opportunity for Azure is to replace the highly inefficient hosting IBM, HP and SAP partners have long provided its on-premise customers. At the same time, Microsoft Dynamics continues to be a viable “2 Tier ERP”’ option for many global SAP customers. More frenemies.

With the Salesforce announcement, Satya likely had to soothe his own CRM team. It has been growing its footprint considerably especially around Marketing functionality and its ability to leverage its Bing product and agency relationships.

On a whale watching trip this weekend, our captain told us all his competitors share a radio frequency where they tell each other about whale sightings. They also use congregations of seagulls and rhinoceros auklets as signs of “bait balls” whales chase. The key is getting to where the action is, then alert crew and tourists are the ones who actually see the whales as they move about quickly and come up ever so briefly. Satya’s using the same principle – work with leading competitors to get to where the action is. Then let the alert, adept win. 

His track record will make for a nice book a few years from now – “Co-opetition 2.0”